SUMMARY:  LC 34 4259S

This bill makes revisions to state and local title ad valorem tax including: 

• providing for a new trade in credit for leased vehicles  
• provides a valuation for a kit car
• adds a penalty for a dealer not completing the title application within 30 days of purchase
• county can keep no more than 1% of the total ad valorem tax funds to defray administrative costs
• failure of the county to disburse funds within 20 days shall result in forfeiture of the administrative fee plus interest on the amount 

Please note, the Senate removed the reduced tag ad valorem tax for those moving into the state and the multi-year registrations, both of which would have reduced the revenue from the tax.  The House agreed to these changes.  The trade in credit for leases will reduce the revenue by an estimated $53 million locally (counties, cities, and schools) from 2015-19 and $47 million for the state. 

POINTS TO CONSIDER:

The title tax went in to effect March 1, 2013 and has already had several changes made to it.  Most of the changes reduce the amount to be paid.

As always with this tax, there are disagreements about the effect of the changes.  The new tax needs to remain as is to gather enough data to know how it will work over time.

Continued reductions undermine the structure of the tax the same way that exemptions erode any tax base.  

Our opposition to changing to this method was based on two facts:  one, no one had solid information on the impact and how it would work for various groups; and two, as it went into effect there would be complaints about paying it and the legislature would in turn reduce the tax or exempt some vehicles or groups.  Both these points have been played out several times in this first year of the tax.